YIOLA STAVRAKI
L.L.C.
ADVOCATES

APPLICATION BASED ON FINANCIAL EXEMPTIONS – NEW FINANCIAL CRITERIA

NEW FINANCIAL CRITERIA FOR INVESTORS APPLYING FOR CYPRIOT CITIZENSHIP BY EXEMPTION

September 2016

On 13/9/2016, the Cyprus Council of Ministers announced the implementation of a set of revised financial criteria for investors wishing to obtain Cyprus Citizenship. The new criteria are even more favourable with the minimum necessary amount of investment having been reduced from €5.000.000 which previously applied to €2.000.000 (excluding VAT, where applicable).

Under the new procedure, the investors are given several options as to how they can invest in the Republic of Cyprus, providing greater flexibility.

Date of Effect

Even though the new criteria have immediate effect, already submitted applications will be based on the provisions as were applicable at the time of submission. However, investors who already submitted their applications, have the possibility of withdrawing and applying anew based on the new criteria as of 13/9/2016.

Potential applicants will have a choice as to which of the two schemes they would like to apply for until 31/10/2016. As of 1/11/2016, only the new criteria will be applicable for the Cyprus Citizenship by investment scheme.

A non-Cypriot citizen meeting any of the below mentioned criteria in section (A) below, either investing personally or through a company / companies in which he / she participates as shareholder, according to his / her share participation, or though the investments undertaken by his / her spouse or undertaken collectively with his / her spouse, or as a high-ranking director of company/ies which meets any of the criteria mentioned in section (A) below may apply for Cypriot citizenship based on financial exemptions.

The applicant must have carried out the necessary investment during the three (3) years preceding the date of his / her application for Cypriot Citizenship and must maintain the said investment for a period of at least three (3) years from the date that he / she becomes a Cypriot citizen. Further, the applicant must also meet the criteria analysed in Section (B) hereinbelow.

A high-ranking director / manager of a company may also submit an application provided that his / her remuneration in the said company is such that it creates tax revenue for the Republic of Cyprus of at least €100.000 for a minimum period of three (3) years, and provided that such taxation has already been paid or pre-paid.



If following periodic checks carried out after the applicant has become a Cypriot citizen it is discovered that any applicable financial criterion or term is not met or breached by the applicant, his / her Cypriot Citizenship may be revoked!





A) NEW FINANCIAL CRITERIA:

1) INVESTING IN REAL ESTATE DEVELOPMENTS AND INFRASTRUCTURE PROJECTS.

The applicant should make an investment of at least € 2.000.000 for the purchase or construction of immoveable property, whether residential or commercial, and whether related to the tourism sector or otherwise.

The above criterion includes investment in land on which property may be built, PROVIDED THAT an investment plan is provided in the application for Cypriot Citizenship for the development of the said land. The purchase of land which is placed under a zero development zone is, of course, excluded.



THE FOLLOWING, HOWEVER, MUST BE TAKEN INTO ACCOUNT:

  • An applicant must purchase a primary residence in Cyprus of at least € 0,5 million, plus VAT, which the applicant must keep for life;
  • If the applicant wants to make further investments in real estate, he / she has to invest an additional €1,5m in residential property so that the total amount invested in residential real estate is at least €2m; This does not apply when it comes to commercial property; If the applicant purchases €2 million commercial property then a residential property of at least € 0,5 million, plus VAT, must be purchased as well, over and above the investment of € 2 million in commercial property in Cyprus;
  • If his primary residence is more than €0,5m the additional amount can be subtracted from the total property investments he / she has to make. In other words, if the primary residence is €0,7m then he has to invest €1,3m in additional real estate units;


On the other hand, if the applicant prefers to invest in a real business in Cyprus (based on any of the financial criteria listed below) he / she has to invest a minimum amount of €2m in addition to the requirement of buying a primary residence for at least €0,5m. In this case the total investment amounts to €2,5m;

The above criterion includes investment in land on which property may be built, PROVIDED THAT an investment plan is provided in the application for Cypriot Citizenship for the development of the said land. The purchase of land which is placed under a zero development zone is, of course, excluded.

OR

2)PURCHASE OR INCORPORATION OR PARTICIPATION IN CYPRIOT BUSINESSES AND COMPANIES

The applicant should purchase, incorporate or participate in companies established and operating in the Republic of Cyprus with an investment of at least €2.000.000. These invested funds must finance the investment objectives of the Companies exclusively in Cyprus, according to their business plan.

Additionally, the company/ies must have physical substantial presence in Cyprus, have activities in Cyprus, with significant turnover, and must employ at least five (5) Cypriot or European citizens. The minimum number of employees shall be increased in case that the applicant is more than one and the said applicants invest simultaneously or almost simultaneously in the same business or company.

In addition, the said 5 employees must during the preceding period of five (5) years prior to the submission of the Application for Cypriot Citizenship have had a legal and continuous stay in Cyprus.

OR

3) INVESTING IN CYPRUS ALTERNATIVE INVESTMENT FUNDS (AIFs) OR FINANCIAL ASSETS OF CYPRUS BUSINESSES OR CYPRIOT ORGANIZATIONS LICENSED BY THE CYPRUS SECURITIES AND EXCHANGE COMMISSION ("CySEC")

The applicant should invest in units of at least € 2.000.000 of AIFs established, licensed and supervised in Cyprus by CySEC. Such investments should be made exclusively in Cyprus and should meet the criteria of the present Scheme or in sectors approved by the Cyprus Minister of Finance.

Acquisition of financial assets in Cypriot businesses or organizations of at least € 2.000.000, such as bonds, bills and securities issued by companies that have demonstrated physical presence and substantial economic activity in Cyprus, following approval by CySEC must and shall be maintained for a period of three (3) years after the granting of Cypriot citizenship. The administrator or auditor of the Fund, in that respect, must inform, in writing, on an annual basis, the Cyprus Ministries of Interior and Finance regarding the value of the initial investment.



The above criterion also includes the purchase of financial assets of Cyprus companies or organizations of at least € 2.000.000, such as bonds, debenture bonds, securities ("ομόλογα, αξιόγραφα και χρεόγραφα") which have been issued, following approval by CySEC, by companies, which prove that they have physical substantial presence in Cyprus and substantial financial activity in Cyprus and which involve funding of the investment objectives of the said companies or organizations exclusively and only in the Republic of Cyprus, based on an investment plan.

It is stressed that the purchase by an AIF of units of other AIFs does NOT meet the above criterion.



OR

4) COMBINATION OF THE ABOVE INVESTMENTS

The applicant may make a combination of the above investments, provided that the total investment will amount to at least € 2.000.000.

Under this criterion, the investor may also invest in special Government Bonds of the Republic of Cyprus for the amount up to € 500.000, which will be issued for this purpose by the Public Debt Management Office of the Ministry of Finance, and must be maintained for a period of at least three (3) years following the granting of the Cypriot citizenship.

The terms and features of the said Bonds are laid down by the applicable General and Special Terms of Issue of Special Government Bonds of the Republic of Cyprus.

Investments in Government Bonds through the secondary market are NOT acceptable.

B) TERMS AND CONDITIONS OVER AND ABOVE THE AFOREMENTIONED CRITERIA:

i) BLANK CRIMINAL RECORD:The applicant must have a blank criminal record - this is now required to be obtained BOTH by the country of origin and country of permanent residence of the applicant, if the two differ. Further, the applicant's name must not be included in any sanction list / list of persons against whom his / her property has been ordered to be ceased within the limits of the European Union.

ii) PERMANENT RESIDENTIAL PROPERTY IN CYPRUS: In ALL cases listed in section (A) hereinabove,the applicant must own a permanent residential property in Cyprus of a purchase price of at least €500.000 + VAT - subject to comments in point 1(A) above. This residential property must be kept for life by the applicant! - It cannot be sold to a third party!

It is noted that members of the same family who submit separate applications as investors may collectively purchase one single permanent residence, provided that the total value of the property covers the sum of €500.000, plus VAT, for every separate applicant.

In case that the residential property exceeds the sum of €500.000, plus VAT, part of this additional sum may be used for the purpose of covering the investment sum based on the criteria in part (A) above.

In addition, it is noted that, in case the applicant has undertaken investment in residential property / units as per criterion A 1 above, he / she will NOT be required to purchase another permanent residential property in Cyprus IF AT LEAST one of the residential properties is of value of at least €500.000, plus VAT, and PROVIDED that he / she shall retain the said permanent residential property for life.

iii) RESIDENCY IN CYPRUS: The applicant, before the naturalization as Cypriot Citizen, must hold a residency permit in Cyprus.

In case the applicant is not yet holder of a residence permit, he / she shall be entitled to file an application for an immigration permit on the basis of Regulation 6 (2) of the Aliens and Immigration Law, simultaneously with the submission of the application for Cypriot Citizenship. Regarding the submission of the application for the issue of an immigration permit exclusively for the purposes of obtaining Cypriot citizenship according to the present investment programme, no other criteria are imposed beyond those provided in Part A and Part B of the present investment programme.



It is provided that the above also apply for the adult members of the family of the investor, who will apply for Cypriot citizenship.

In case the application for Cypriot Citizenship is denied / rejected for any reason whatsoever, the immigration permit which was obtained according to the provisions of the present Decision, shall be immediately cancelled.